Mergers & Acquisitions:
How I Found Post-Acquisition Success
with Keith Conley

Michelle Seger
So, Keith, as we're getting started, let's kind of set the stage because you've had you've had a very storied career. So we'd love to hear a little bit about the story in terms of how you got to what you're doing right now. Because, you know, when you look at what you're doing, Keith, it's the kind of thing, you know, everybody goes, wow, I'd like to be doing that, too. It's like, well, how do you get there? And tell us a little bit about about the background story and how you're doing what you're doing.

Keith Conley
Yeah, well, you know, I came out of undergrad with a degree in civil engineering and started with Bechdel building nuclear power plants. And I got into the project management side and like the business and I wasn't a very good design engineer. So I went back to grad school, got my MBA and then got into the management consulting world with the Big Four and spent 15 years there working with many of the Fortune 20 around the world.

Keith Conley
And it was just a tremendous experience to apply what you learned in business school and just get exposed to so many different industries and leaders and so forth. And then during the .com era, I jumped into a software company running the professional services there. I then did a stint with NCR for eight years, helping them run their outsourcing business.

Keith Conley
And then I came across a private equity company that was working, had invest in a company called DTI, which was legal services, outsourcing legal services. And they had traditionally been copy and scanning, and they're looking for an executive to come in to run their technology business, which at that time was electronic discovery with with legal issues. So I came and we built a business from 60 million to 1.2 billion.

Keith Conley
Along the way, I became president overall of the operating units and we made 24 acquisitions along the way, had four transactions with four different private equity firms. So now I found myself, I left a few years ago and when I left a private equity firm started reaching out to me to provide assistance during the due diligence phase, and they would look at targets in the legal service area or software area.

Keith Conley
So for the last couple of years, I've worked with about 16 private equity firms, helping them assess the risk. Speaking to the target management team that they're looking to buy, helping with valuations and an overall assessment of should they do this deal or not. And it's been a lot of fun. You know, it's one thing when you're running a company and you're owned by private equity company, but it's a lot more enjoyable to be working for a private equity company, owning a company.

Mark Donnolo
It's a lot more fun with much, much better.

Keith Conley
It is a lot more fun. So that's what I've been doing for the last two years and have enjoyed it tremendously.

Mark Donnolo
So, so one thing caught my ear. There are a lot of things caught my eye, but one in particular I see is that a DTI went from 60 million. Is that right? To 1.2 billion? Right. That's incredible. And then you go, A, how do you do that? You have it a lot. You had a lot a lot of acquisitions there.

Mark Donnolo
How do you how much of that was acquisition growth? How much that was organic? Was that part of the plan to get to that level through acquisitions? Kind of what did it look like in terms of how you made such a huge jump?

Keith Conley
Yeah, well, the private equity companies that invested in us over that 12 year period would assist us primarily, you know, besides strategic planning would be investments in roll ups. So it was an industry that was very accretive. If you go by companies at five or six times EBITDA. So that was always the plan to have an acquisition strategy.

Keith Conley
In fact, we would acquire we got the process down so good that we would acquire, then integrate quickly to get the synergies. And one of the challenges the private equity companies would have when they would evaluate us would be to try to tease out what was organic versus inorganic. Because when you integrate and you get the financials going, it's very difficult to measure organic.

Keith Conley
So originally we were we were growing about 20% top line or organic. But after a while it becomes muddy and very difficult to measure the the true organic nature, given you're trying to integrate the companies quickly to capture those synergies.

Mark Donnolo
Wow. Tremendous feat. Well, so so when you look at the market today, Michelle, you talked about, you know, the the amount of M&A activity happening out there, which is unprecedented as where we sit right now, the way the economy is going, the market, etc.. What's your general assessment of what the M&A market looks like right now? Say from the perspective of a private equity buyer or even the perspective of a company that's growing through acquisition, you know, acquiring other companies?

Keith Conley
Well, from a private equity perspective, they're not having difficulty raising funds. I mean, you're talking about multibillion dollar funds. You know, historically, the returns have been very, very healthy. When you invest in private equity. So raising the capital is not the problem. The challenge is trying to find businesses that are valued appropriately to investing, because the valuations today on these corporations, at least in technology, are at an all time high.

Keith Conley
If, for example, software companies in the legal services industry are going for 25 times EBITDA, service companies 12 or 13 times EBITDA. So it's been difficult to really try to get some deals done due to the valuation. So, you know, they have a lot of money and, you know, having the money sit idle isn't helping their shareholders any.

Keith Conley
So they're taking more risk right now to deploy their money looking at alternative things like dentist roll ups and veterinarians and dermatologists, they're diversifying even more now to find areas to invest in. From an enterprise perspective, it's a great time to sell. Again, my experience has been more around the technology, but right now, you know, it's an all time high to sell your company.

Keith Conley
And, you know, you never know about the the certainty of the markets three or four or five years out when the exit would occur after you get bought. So it's a great time if you're looking you're interested in selling your company just because of the valuations that you can achieve right now.

Mark Donnolo
So so sounds like a couple of things are happening. One is there's the challenge of you're saying take risk, which I interpret as the PE's or maybe having to pay more than they want to pay. And then there's the diversification. Okay. We're going to look in new areas, new places that we haven't looked at previously.

Keith Conley
Exactly.